Putin’s Development Bank to Increase Olympic Loan Provisions

  • $3.1 billion in Olympic loans to be extended for 25 years
  • Bank plans to sell 3.6% stake in Gazprom to avoid default

Russian state-development bank Vnesheconombank, which may need a bailout of more than 1.3 trillion rubles ($20 billion), will set aside more money to cover bad debts tied to the Sochi Olympics.

VEB, as the lender is known, will restructure more than 200 billion rubles in Olympic loans to extend them by 25 years, Chief Executive Officer Sergey Gorkov said Thursday at a Moscow press conference. That compares with a previous plan of five years.

“We don’t think the Olympic sites are problematic,” Gorkov said. “The Supervisory Council has decided to change our approach to restructuring the Olympic objects. It will let all our borrowers service their debt and develop.”

VEB has been crippled by a funding shortfall after it was hit with sanctions in 2014 following Russia’s annexation of Crimea. The lender, which has already received more than $6 billion from one of Russia’s sovereign wealth funds to stay afloat, is trying to right itself after years of financing President Vladimir Putin’s projects, including the Sochi Olympics and secret aid to allies in Ukraine.

Gorkov said the lender plans to sell its 3.6 percent stake in Gazprom PJSC and recapitalize two commercial banks it owns to sell them as it seeks to avoid default.

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